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what impact does the Schengen Agreement have on the UK

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The biggest impact is that you need to go through passport control when travelling between the UK and the rest of the EU (exc. Ireland). (Although EU citizens can show ID cards instead of passports if their countries have them - Britain and Ireland don't). It also means that passport control is required at all Eurostar stations, and considerably complicates extending cross-channel train journeys past London St Pancras.

For those not able to enter the UK without a visa (Russians, non-EU Eastern Europeans, most Africans, most Asians, Bolivians & Colombians), the biggest impact is requiring a UK visa to enter the UK, wheras a visa from one Schengen state covers the entire Schengen zone.

Travel between Schengen countries does not have passport/ID checks, except in exceptional circumstances.

If Britain joined the Schengen zone, it would mean no more long queues at airports for passport checks when returning from mainland Europe, and tourists with a Schengen visa could include the UK on their itinerary - and Ireland would no longer be prevented from joining (joining at present would require border controls to be instated on the mostly open border with Northern Ireland).

However, it would also mean - in practice - that any illegal immigrants who have reached continental Europe (e.g. visa overstayers, or via the Mediterranean) despite the security at external Schengen borders would have unrestricted access to the UK (i.e. instead of stowing away on ferries, they could simply buy train, plane, ferry or coach tickets), where it is arguably easier to hide than on the Continent due to a lack of police checking ID and no mandatory registration of addresses.

This is a major reason the UK is not in the Schengen zone, particular for anti-Immigration tabloids.

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Q: How does the Schengen agreement impact the UK?
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