its the government's new system of allocating funding to pupils who really need it.
free school meals are taken as an indication of poverty. pupils living in poverty achieve less in school than pupils from more comfortable backgrounds (generally, according to the government, ours don't follow the trend). government wants to bridge the attainment gap by putting more money up to support children who are living in poverty.
so, if a school has a lot of children on free school meals, it has a lot of children living in poverty, who are entitled, under government rules, to extra funding.
the school can only claim the funding if the family claim the free school meals.
if you are entitled to a fsm, you must claim, for money to be allocated to the school for your child's benefit.
many of our families who are entitled to fsm do not claim, because the entire family don't eat lunch. eating lunch at school would make children want lunch at weekends and in the holidays, and families can't afford three meals a day so they all go without. so they don't claim. schools are saying 'we won't force your child to eat the fsm, but do claim because the money can pay for one-to-one tuition, extra teaching assistants, resources etc that will help your child.'
its not a fraud. its trying to get people in need to work with the system, even though they don't fully understand it.